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Analysis of house prices in Spain

  • Jorge Martínez Pagés

    ()

    (Banco de España)

  • Luis Ángel Maza

    ()

    (Banco de España)

Registered author(s):

    House prices in Spain have shown one of the biggest cumulative growth rates among the OECD countries over the past five years and, indeed, over a more extensive period. This paper focuses on analysing this development and its possible determinants. The evidence provided suggests income and nominal interest rates are pivotal explanatory factors, although equity returns may also have been influential in the final years of the sample. According to the estimated models, house prices are currently above their long-term equilibrium level by an amount not unlike other times in the past. Therefore, something of a correction –of an intensity difficult to estimate but not necessarily sharper than in past episodes– may be expected in the future.

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    File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/03/Fic/dt0307e.pdf
    File Function: First version, June 2003
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    File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/03/Fic/dt0307.pdf
    File Function: First Spanish version, June 2003
    Download Restriction: no

    Paper provided by Banco de España & Working Papers Homepage in its series Working Papers with number 0307.

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    Length: 45 pages
    Date of creation: Jun 2003
    Date of revision:
    Handle: RePEc:bde:wpaper:0307
    Contact details of provider: Web page: http://www.bde.es/

    Web page: http://www.bde.es/bde/en/secciones/informes/Publicaciones_se/docs/
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    1. David Genesove & Christopher Mayer, . "Loss Aversion and Seller Behavior: Evidence from the Housing Market," Zell/Lurie Center Working Papers 323, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
    2. Holly, Sean & Jones, Natasha, 1997. "House prices since the 1940s: Cointegration, demography and asymmetries," Economic Modelling, Elsevier, vol. 14(4), pages 549-565, October.
    3. Meen, Geoffrey, 2002. "The Time-Series Behavior of House Prices: A Transatlantic Divide?," Journal of Housing Economics, Elsevier, vol. 11(1), pages 1-23, March.
    4. M.M.G. Fase, 2001. "Investments in Painting: The interaction of monetary return and psychic income," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    5. Meen, Geoffrey P, 1990. "The Removal of Mortgage Market Constraints and the Implications for Econometric Modelling of UK House Prices," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(1), pages 1-23, February.
    6. Wheaton, William C., 1974. "A comparative static analysis of urban spatial structure," Journal of Economic Theory, Elsevier, vol. 9(2), pages 223-237, October.
    7. DiPasquale Denise & Wheaton William C., 1994. "Housing Market Dynamics and the Future of Housing Prices," Journal of Urban Economics, Elsevier, vol. 35(1), pages 1-27, January.
    8. Malpezzi, Stephen, 1999. "A Simple Error Correction Model of House Prices," Journal of Housing Economics, Elsevier, vol. 8(1), pages 27-62, March.
    9. Ortalo-Magné, François & Rady, Sven, 2001. "Housing Market Dynamics: On the Contribution of Income Shocks and Credit Constraints," CEPR Discussion Papers 3015, C.E.P.R. Discussion Papers.
    10. Muellbauer, John & Murphy, Anthony, 1997. "Booms and Busts in the UK Housing Market," Economic Journal, Royal Economic Society, vol. 107(445), pages 1701-27, November.
    11. Englund, Peter & Ioannides, Yannis M., 1997. "House Price Dynamics: An International Empirical Perspective," Journal of Housing Economics, Elsevier, vol. 6(2), pages 119-136, June.
    12. Juan J. Dolado & José M. González-Páramo & José Viñals, 1997. "A Cost-Benefit Analysis of Going from Low Inflation to Price Stability in Spain," Working Papers 9728, Banco de España;Working Papers Homepage.
    13. Kenny, Geoff, 2003. "Asymmetric adjustment costs and the dynamics of housing supply," Economic Modelling, Elsevier, vol. 20(6), pages 1097-1111, December.
    14. Dougherty, Ann & Van Order, Robert, 1982. "Inflation, Housing Costs, and the Consumer Price Index," American Economic Review, American Economic Association, vol. 72(1), pages 154-64, March.
    15. Jeremy C. Stein, 1995. "Prices and Trading Volume in the Housing Market: A Model with Down-Payment Effects," The Quarterly Journal of Economics, Oxford University Press, vol. 110(2), pages 379-406.
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